The most obvious answer is that all sorts of private market valuations for Web companies have come down in recent months. That’s because of the beatings that Facebook, Zynga and Groupon have taken since they’ve gone public.

But for Spotify, you can get a bit more specific if you want a reason to pass at $4 billion: Investors already know what a digital subscription business looks like at scale.

That would be Netflix, which has some 27 million subscribers at around $8 a month. Today, after Carl Icahn goosed it a bit, Netflix has a market cap of $4.3 billion.

Spotify says it has 4 million paying subscribers at around $10 a month. Bear in mind that if you value Spotify at $4 billion today, you’re really saying it will be worth three times that — $12 billion — in a few years, when it would presumably go public.

The two companies aren’t exactly analogous — Spotify, for instance, also has a nascent advertising business — but they sure look similar from a distance. They’re both international, they’re both dependent on rights deals for their content and they both face the perpetual threat of competition from the likes of Amazon, Apple, etc.

So even at $3 billion, Spotify backers will need to work hard to explain why their digital subscription business is worth so much more than Netflix when it comes time to IPO.

Of course, investors used to place a much higher value on Netflix, too. And the market has a short memory, so perhaps it will be an easier story to tell in a couple years. But right now it’s a tough sale.

AllThingsD by Writer

AllThingsD.com is a Web site devoted to news, analysis and opinion on technology, the Internet and media. But it is different from other sites in this space. It is a fusion of different media styles, different topics, different formats and different sources. Read more »